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Grocery stores curry consumer favor, report finds


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Grocery stores curry consumer favor, report finds

U.S. supermarkets may be duking it out for market share, but collectively they appear to be gaining ground in the battle for consumer favor compared to other areas of the retail sector.

Customer perceptions of grocers and retail pharmacies rose in 2017, according to a report released Feb. 27 by the American Customer Satisfaction Index, or ACSI. Over the same period, customer opinions of internet retailers, department stores, discount stores and specialty retailers fell. Across all retail companies, consumer satisfaction fell 0.3% to a rating of 78.1 during 2017.

The ACSI compiled its sub-indexes for retail companies using email interviews with 50,186 customers collected between Jan. 5, 2017, and Dec. 13, 2017. The indexes rate sub-sectors and companies on a scale from 0 to 100, with 100 being the highest rating.

For 2017, the satisfaction index for supermarkets stood at 79, up from 78 in 2016, according to the report. Publix, a privately held grocery chain that operates in the Southeastern U.S., earned the highest rating of 86, followed by Aldi Einkauf GmbH & Co. oHG-owned Trader Joe's at 85. Costco Wholesale Corp., the highest-ranked public company on the list, earned a score of 83.

Walmart Inc., which market research firm Euromonitor International found was the largest U.S. grocer by market share in 2016, received a 73, the lowest of the 22 national and regional grocers on the ACSI list.

Broadly, customers gave food retailers higher marks for food quality, a wider variety of merchandise and better in-store experiences, the firm wrote in its report. In the wake of Inc.'s acquisition of Whole Foods Market Inc., many grocers have expanded their offerings of organic and natural groceries as well as prepared foods, ACSI said.

"The threat of competition from Amazon's entry into the market appears to have spurred grocery stores to bolster their offerings," ACSI wrote in its report, adding that it was "too soon to gauge the effect of [Whole Foods'] acquisition by Amazon" on Whole Foods' own score since the e-commerce giant has only started to make visible changes to the Austin, Texas-based grocery chain.

Consumers' perception of checkout speed remained unchanged from the prior year, according to the report.

Health and personal care companies also rose to 79 from the 2016 figure of 78, propelled by higher ratings year over year for CVS Health Corp. and Walgreens Boots Alliance Inc.

Despite declines, online retailers reign

While the category's collective rating fell in 2017, internet retailers remained the highest-rated category in the survey. Companies in the space, including Amazon and eBay Inc., received a collective rating of 82, down from 83 in 2016.

Paying for purchases, product images, customer reviews, shipping options, and merchandise variety and availability all declined among e-commerce players in 2017, customers polled by the ACSI said.

Customers were also less satisfied with department and discount stores in 2017, for which the index declined 1.3% to 77. Consumers gave lower scores to Dollar General Corp., Sears Holdings Corp. and regional department store Dillard's Inc. in 2017 than they did in 2016.

The ratings fell as customers gave stores in the category lower marks for a variety of metrics, from how often the retailers offered discounts on products, to the layout of stores, to the experience retailers offered online.

Specialty retailers also notched a decline, falling to 79 from 80 in 2016 as customers reported that their perception of retailers including Gap Inc., Office Depot Inc. and Gamestop Corp. degraded. A lack of sales, stocking issues and a dearth of brand-name items hurt specialty retailers the most, according to consumers.

One exception was L Brands Inc., owner of Victoria's Secret apparel shops and Bath & Body Works personal care stores. Customers gave the company an 85, up from 81 in 2016, a sign that the retailer's investment in store improvements and expansions may be paying off, ACSI said.